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Wednesday, 24 February 16
THIRTEEN - NOT ALWAYS AN UNLUCKY NUMBER? - CLARKSONS
 Back in early 1999 the price of a 5 year old Panamax bulkcarrier dipped to $13.5m, and ever since analysts have hailed purchase decisions made at that time as some of the most lucrative shipping deals ever seen. Today, with the price back at $13m, perhaps it’s a good time to reflect on how successful investors were back in 1999 and whether there are similar opportunities once again.
What Was The Deal?
The graph shows for each year since 1990 the return that would have been generated by the purchase of a 5 year old Panamax bulkcarrier at the start of the year, the subsequent operation for ten years at the prevailing one year timecharter rate and then the sale of the unit at the end of that period as a 15 year old (for units purchased in 2007 and later, disposal at start 2016 was assumed). At the end of 1999 investors could pick up a 5 year old Panamax bulker for $14m. Trading that vessel at the start year one year timecharter rate for 10 years would have generated estimated earnings of $66.5m (after opex), and then as a 15 year old unit in 2009 the vessel could have been sold for $12.5m. That’s a small loss of $1.5m on the asset but still a total return of $65m, and an impressive internal rate of return (IRR) of 26%.
Playing Snap
A few years later, 5 year old Panamax bulkcarrier purchases did perhaps even better. Buying a 5 year old in 2002, once again at $14m, trading at the timecharter rate and selling as a 15 year old would have generated total returns of $73.2m and an IRR of 41%, whilst the equivalent project in 2003 would have generated $66.1m and an IRR of 44%. These vessels would have generated boom earnings earlier in the project period, subject to a heavier weighting in terms of the internal rate of return calculation.
Not Always A Good Hand
However, not all investors are so lucky. In this example, 5 year old ships purchased since 2008 (and sold this year, so admittedly with less time to hit upon a period of boom earnings) generated negative returns, and those purchased pre-1995 an average IRR of 7%. Buyers in 2008 would have lost a whopping $82.1m on the asset. Nevertheless, there was clearly a golden period; in the years 1998-2006 investors would have achieved an IRR ranging between 20% and 44%.
Unlucky (Or Lucky) 13?
So for those who have had the stomach to buy in at difficult times, there have been more than ample rewards. Today the price of a 5 year old Panamax is back at $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
Thursday, 28 January 16
WHAT ARE THE PROSPECTS FOR COAL IN LIGHT OF THE PARIS CLIMATE AGREEMENT? - GERMAN COAL IMPORTERS ASSOCIATION
This depends – says the VDKi – to a very great extent on who you want to believe more, the United Nations or the International Energy A ...
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- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- GMR Energy Limited - India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Australian Coal Association
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
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